Uh, what do the PS3 and 360 bring to the table that they cannot match? There are millions of Wii owners out there who think the Wii brings much more to the table than the PS3 or 360 ever will. They are reinvesting that money in games. They do bring more 3rd parties under the Nintendo name (most recently Monolith Soft).

Nintendo doesn't have a parent company to leech off of to fund development or to pay off third parties to make games for their systems when they are selling badly. They depend completely on their own success. The money they make is immediately reinvested into new development. It looks like a lot of money, but if you look at the ridiculous amounts of money Microsoft and Sony spend trying to keep their struggling systems alive you'll see that a small company that depends on it's own resources isn't going to be able to do that.

For example, Microsoft is still throwing money at RPG companies to try and keep their system alive in Japan. They have spent hundreds of millions of dollars buying and making games that appeal to the Japanese. They obviously aren't getting any return on this. That's the kind of spending you can only do when your goal isn't to make a profit. Sony similarly has paid for development of Lair and many other 3rd party games that are not going to come close to returning their investment. They paid money to optimize the Unreal Engine for UT3, and they are still suffering billions of dollars of losses in this generation.

That's the kind of spending big businesses can do. That's what happens when your goal isn't to make a profit, but to make a monopoly. Microsoft wants to monopolize home entertainment, and Sony wants to monopolize HD formats. The most entertaining part of this whole situation is neither are succeding, and both are getting their asses handed to them by a tiny little company who just wants to make games. The little guy that spends his money wisely is beating the corporate giants with endlessly deep pocket books. This kind of situation is practically unheard of, and it's actually one of the most interesting corporate standoffs in any industry.

QFT - But they like it when people think that.